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Fiscal control audit report of Catawba County Clerk of Superior Court, Newton, North Carolina

Fiscal control audit report of Catawba County Clerk of Superior Court, Newton, North Carolina.

STATE OF
NORTH CAROLINA
FISCAL CONTROL AUDIT REPORT ON
CATAWBA COUNTY CLERK OF SUPERIOR COURT
NEWTON, NORTH CAROLINA
FOR THE PERIOD AUGUST 1, 2003 THROUGH JANUARY 31, 2004
OFFICE OF THE STATE AUDITOR
RALPH CAMPBELL, JR.
STATE AUDITOR
FISCAL CONTROL AUDIT REPORT ON
CATAWBA COUNTY CLERK OF SUPERIOR COURT
NEWTON, NORTH CAROLINA
FOR THE PERIOD AUGUST 1, 2003 THROUGH JANUARY 31, 2004
THE HONORABLE AL JEAN M. BOGLE, CLERK OF SUPERIOR COURT
Ralph Campbell, Jr.
State Auditor
STATE OF NORTH CAROLINA
Office of the State Auditor
2 S. Salisbury Street
20601 Mail Service Center
Raleigh, NC 27699- 0601
Telephone: ( 919) 807- 7500
Fax: ( 919) 807- 7647
Internet http:// www. osa. state. nc. us
AUDITOR’S TRANSMITTAL
The Honorable Michael F. Easley, Governor
The General Assembly of North Carolina
The Honorable Al Jean M. Bogle, Clerk of Superior Court
This report presents the results of our fiscal control audit of Catawba County Clerk of
Superior Court for the period August 1, 2003 through January 31, 2004. Our work was
performed by authority of Article 5A of Chapter 147 of the North Carolina General Statutes
and was conducted in accordance with the standards contained in Government Auditing
Standards issued by the Comptroller General of the United States. The objective of a fiscal
control audit is to gather and evaluate evidence about selected internal control policies and
procedures designed to ensure: ( 1) reliable financial accounting and reporting and/ or ( 2)
compliance with finance- related laws and regulations. Should any information arise during
the audit indicating that significant abuse may have occurred, the audit objective may be
extended to include internal control designed to prevent abuse and to determine whether the
abuse did in fact occur and its impact. Abuse involves behavior that is deficient or improper
when compared with behavior that a prudent person would consider reasonable and necessary
business practice.
The results of our audit disclosed no internal control deficiencies or instances of
noncompliance or abuse that are considered reportable under Government Auditing
Standards.
North Carolina General Statutes require the State Auditor to make audit reports available to
the public. Copies of audit reports issued by the Office of the State Auditor may be obtained
through one of the options listed in the back of this report.
Ralph Campbell, Jr.
State Auditor
TABLE OF CONTENTS
PAGE
BACKGROUND INFORMATION .................................................................................................... 1
OBJECTIVES, SCOPE, METHODOLOGY, AND RESULTS ............................................................... 3
DISTRIBUTION OF AUDIT REPORT.............................................................................................. 7
1
BACKGROUND INFORMATION
The office of the Clerk of Superior Court is created by the North Carolina Constitution which
mandates that there be a Clerk of Superior Court for each county. Under the constitution, it is
the responsibility of the General Assembly to prescribe jurisdiction and the powers of the
Clerk. Laws of the General Assembly regarding clerks must be uniformly applied in every
county in the State.
Voters of each county elect the Clerk of Superior Court to a four- year term. Clerks are paid
by the State, with their salaries scaled in accordance with the population of their counties.
The Clerk appoints the assistants, deputies and employees in his or her office. The number of
assistants and deputies that each clerk may employ varies from county to county depending
on the volume of business. Assistant and deputy clerks are paid on a salary schedule fixed by
the Administrative Office of the Courts based on education and years of service in the Clerk’s
office; the maximum and minimum salaries within that scale are fixed by the General
Assembly.
The responsibilities of the Clerk are numerous and varied. The Clerk, as a judicial officer of
the Superior Court, has judicial responsibilities. The Clerk is judge of probate; that is, the
Clerk handles the probate of wills ( proceedings to determine if a paper writing is a valid will)
and the administration of estates of decedents, minors and incompetents. The Clerk also
hears a variety of special proceedings such as adoptions, incompetency determinations and
partitions of land and is empowered to issue arrest and search warrants and to exercise the
same powers as a magistrate with respect to taking pleas of guilty to minor littering, traffic,
wildlife, boating, marine fisheries, alcoholic beverage, State park recreation and worthless-check
offenses.
The Clerk is also responsible for all clerical and record- keeping functions of the Superior
Court and District Court. The Clerk operates a unified record- keeping system for all civil
actions, special proceedings, estates, criminal actions, juvenile actions, minutes of the court,
judgments, liens, lis pendens, and numerous other records required by law. The Clerk
maintains the judgment docket, is custodian of evidence in civil and criminal trials, and issues
civil summons and subpoenas. In addition, the Clerk invests money received and held by his
or her office in trust and receives and administers insurance or other money on behalf of
minors and incapacitated adults.
2
[ This Page Left Blank Intentionally ]
3
OBJECTIVES, SCOPE, METHODOLOGY, AND RESULTS
OBJECTIVES
As authorized by Article 5A of Chapter 147 of the North Carolina General Statutes and in
accordance with the standards contained in Government Auditing Standards issued by the
Comptroller General of the United States, we have conducted a fiscal control audit at
Catawba County Clerk of Superior Court.
The objective of a fiscal control audit is to gather and evaluate evidence about selected
internal control policies and procedures designed to ensure: ( 1) reliable financial accounting
and reporting and/ or ( 2) compliance with finance- related laws and regulations. Should any
information arise during the audit indicating that significant abuse may have occurred, the
audit objective may be extended to include internal control designed to prevent abuse and to
determine whether the abuse did in fact occur and its impact. Abuse involves behavior that is
deficient or improper when compared with behavior that a prudent person would consider
reasonable and necessary business practice.
Management is responsible for establishing and maintaining effective internal control.
Internal control is a process designed to provide reasonable assurance that relevant objectives
are achieved. Because of inherent limitations in internal control, errors or fraud may
nevertheless occur and not be detected. Also, projections of any evaluation of internal control
to future periods are subject to the risk that conditions may change or compliance with
policies and procedures may deteriorate.
SCOPE
Our audit scope covered the period August 1, 2003 through January 31, 2004 and included
selected internal controls in the following areas:
General
Control Environment - The control environment consists of the actions, policies, and
procedures that reflect the overall attitude of top management about control and its
importance to the entity. The control environment sets the tone of the organization,
influencing the control consciousness of its employees.
Information System Controls - Information system controls include activities that
relate to many computerized information system applications and support the effective
functioning of application controls. Information system controls include access and
end- user controls.
Financial Accounting and Reporting
Cash and Investment Cycle - The cash and investment cycle generally consists of the
activities associated with the custody of cash and investments. Financial statement
accounts typically impacted by the cycle include cash, certificates of deposit, and
other investments.
OBJECTIVES, SCOPE, METHODOLOGY, AND RESULTS ( CONTINUED)
4
Cash Receipts Cycle – The cash receipts cycle generally consists of the activities
associated with the receipt of cash. All financial statement accounts are impacted by
this cycle.
Cash Disbursements Cycle – The cash disbursements cycle generally consists of the
activities associated with disbursing cash for items other than operating and payroll
costs. All financial statement accounts are impacted by this cycle.
Finance- Related Compliance
Listed below are the compliance areas with one or more examples of the criteria for each.
Cash Management and Investments – Laws and regulations set limits on authorized
deposits and investments. Moneys are required to be deposited in approved
depositories and invested in specific investment types. Accounts must be protected
with adequate insurance and collateral. Also, disbursements that are unclaimed by
payees for a prescribed time period are often required to be remitted to the State
Treasurer in accordance with the State of North Carolina’s Escheats and Abandoned
Property Program.
Deposit of Receipts – Laws and regulations require deposit of moneys as soon as
possible in order to safeguard assets and to enhance the cash management and
investment program. Receipts over a specified amount are required to be deposited on
a daily basis.
Annual Financial Reporting – Laws and regulations require preparation of annual
financial report information in a prescribed format and within a prescribed timeframe.
Financial statement information is required to be filed with the Administrative Office
of the Courts timely after year- end.
Case Files – Laws and regulations set record maintenance and security requirements.
Records are required to be filed in a secure location using a uniform indexing system.
Costs and Fees – Laws and regulations set costs and fees to be charged. Uniform
costs and fees are required to be charged as established by State law.
Special Provisions – Laws and regulations impose specific requirements on particular
entities or activities. Partial payment collections are required to be distributed in the
order prescribed by State law. Other special provisions include the investment of
accounts greater than $ 2,000, record retention requirements, property held for
safekeeping procedures, and review procedures over monthly aging reports.
OBJECTIVES, SCOPE, METHODOLOGY, AND RESULTS ( CONCLUDED)
5
METHODOLOGY
To accomplish our audit objectives, we gained an understanding of internal control,
performed tests of control effectiveness, and performed corroborating direct tests of the
accounting records, reports, and/ or compliance as we considered necessary in the
circumstances. Specifically, we performed procedures such as interviewing personnel,
observing operations, reviewing policies, analyzing accounting records, and examining
documentation supporting recorded transactions and balances. Our procedures were more
limited than would be necessary to give an opinion on internal control, and accordingly, we
do not express such an opinion.
RESULTS
The results of our audit disclosed no internal control deficiencies or instances of
noncompliance or abuse that are considered reportable under Government Auditing
Standards.
6
[ This Page Left Blank Intentionally ]
7
DISTRIBUTION OF AUDIT REPORT
In accordance with General Statutes 147- 64.5 and 147- 64.6( c)( 14), copies of this report have
been distributed to the public officials listed below. Additional copies are provided to other
legislators, state officials, the press, and the general public upon request.
EXECUTIVE BRANCH
The Honorable Michael F. Easley
The Honorable Beverly M. Perdue
The Honorable Richard H. Moore
The Honorable Roy A. Cooper, III
Mr. David T. McCoy
Mr. Robert L. Powell
Governor of North Carolina
Lieutenant Governor of North Carolina
State Treasurer
Attorney General
State Budget Officer
State Controller
JUDICIAL BRANCH
The Honorable Al Jean M. Bogle
The Honorable John M. Kennedy
Mr. Steve Lusk
Catawba County Clerk of Superior Court
Director, Administrative Office of the Courts
Deputy Director for Administrative Services
Administrative Office of the Courts
LEGISLATIVE BRANCH
Appointees to the Joint Legislative Commission on Governmental Operations
President Pro Tempore
Senator Marc Basnight, Co- Chair
Senator Charles W. Albertson
Senator Patrick J. Ballantine
Senator Daniel G. Clodfelter
Senator Walter H. Dalton
Senator Charlie S. Dannelly
Senator James Forrester
Senator Linda Garrou
Senator Wilbur P. Gulley
Senator Fletcher L. Hartsell, Jr.
Senator David W. Hoyle
Senator Ellie Kinnaird
Senator Jeanne H. Lucas
Senator Stephen M. Metcalf
Senator Anthony E. Rand
Senator Eric M. Reeves
Senator Robert A. Rucho
Senator R. C. Soles, Jr.
Senator Scott Thomas
Speaker of the House
Representative James B. Black, Co- Chair
Representative Richard T. Morgan, Co- Chair
Representative Martha B. Alexander
Representative Rex L. Baker
Representative Bobby H. Barbee, Sr.
Representative Harold J. Brubaker
Representative Debbie A. Clary
Representative E. Nelson Cole
Representative James W. Crawford, Jr.
Representative William T. Culpepper, III
Representative W. Pete Cunningham
Representative W. Robert Grady
Representative Joe Hackney
Representative Julia C. Howard
Representative Joe L. Kiser
Representative Edd Nye
Representative William C. Owens, Jr.
Representative Wilma M. Sherrill
Representative Thomas E. Wright
Other Legislative Officials
Mr. James D. Johnson Director, Fiscal Research Division
May 17, 2004
ORDERING INFORMATION
Copies of this report may be obtained by contacting the:
Office of the State Auditor
State of North Carolina
2 South Salisbury Street
20601 Mail Service Center
Raleigh, North Carolina 27699- 0601
Internet: http:// www. ncauditor. net
Telephone: 919/ 807- 7500
Facsimile: 919/ 807- 7647

STATE OF
NORTH CAROLINA
FISCAL CONTROL AUDIT REPORT ON
CATAWBA COUNTY CLERK OF SUPERIOR COURT
NEWTON, NORTH CAROLINA
FOR THE PERIOD AUGUST 1, 2003 THROUGH JANUARY 31, 2004
OFFICE OF THE STATE AUDITOR
RALPH CAMPBELL, JR.
STATE AUDITOR
FISCAL CONTROL AUDIT REPORT ON
CATAWBA COUNTY CLERK OF SUPERIOR COURT
NEWTON, NORTH CAROLINA
FOR THE PERIOD AUGUST 1, 2003 THROUGH JANUARY 31, 2004
THE HONORABLE AL JEAN M. BOGLE, CLERK OF SUPERIOR COURT
Ralph Campbell, Jr.
State Auditor
STATE OF NORTH CAROLINA
Office of the State Auditor
2 S. Salisbury Street
20601 Mail Service Center
Raleigh, NC 27699- 0601
Telephone: ( 919) 807- 7500
Fax: ( 919) 807- 7647
Internet http:// www. osa. state. nc. us
AUDITOR’S TRANSMITTAL
The Honorable Michael F. Easley, Governor
The General Assembly of North Carolina
The Honorable Al Jean M. Bogle, Clerk of Superior Court
This report presents the results of our fiscal control audit of Catawba County Clerk of
Superior Court for the period August 1, 2003 through January 31, 2004. Our work was
performed by authority of Article 5A of Chapter 147 of the North Carolina General Statutes
and was conducted in accordance with the standards contained in Government Auditing
Standards issued by the Comptroller General of the United States. The objective of a fiscal
control audit is to gather and evaluate evidence about selected internal control policies and
procedures designed to ensure: ( 1) reliable financial accounting and reporting and/ or ( 2)
compliance with finance- related laws and regulations. Should any information arise during
the audit indicating that significant abuse may have occurred, the audit objective may be
extended to include internal control designed to prevent abuse and to determine whether the
abuse did in fact occur and its impact. Abuse involves behavior that is deficient or improper
when compared with behavior that a prudent person would consider reasonable and necessary
business practice.
The results of our audit disclosed no internal control deficiencies or instances of
noncompliance or abuse that are considered reportable under Government Auditing
Standards.
North Carolina General Statutes require the State Auditor to make audit reports available to
the public. Copies of audit reports issued by the Office of the State Auditor may be obtained
through one of the options listed in the back of this report.
Ralph Campbell, Jr.
State Auditor
TABLE OF CONTENTS
PAGE
BACKGROUND INFORMATION .................................................................................................... 1
OBJECTIVES, SCOPE, METHODOLOGY, AND RESULTS ............................................................... 3
DISTRIBUTION OF AUDIT REPORT.............................................................................................. 7
1
BACKGROUND INFORMATION
The office of the Clerk of Superior Court is created by the North Carolina Constitution which
mandates that there be a Clerk of Superior Court for each county. Under the constitution, it is
the responsibility of the General Assembly to prescribe jurisdiction and the powers of the
Clerk. Laws of the General Assembly regarding clerks must be uniformly applied in every
county in the State.
Voters of each county elect the Clerk of Superior Court to a four- year term. Clerks are paid
by the State, with their salaries scaled in accordance with the population of their counties.
The Clerk appoints the assistants, deputies and employees in his or her office. The number of
assistants and deputies that each clerk may employ varies from county to county depending
on the volume of business. Assistant and deputy clerks are paid on a salary schedule fixed by
the Administrative Office of the Courts based on education and years of service in the Clerk’s
office; the maximum and minimum salaries within that scale are fixed by the General
Assembly.
The responsibilities of the Clerk are numerous and varied. The Clerk, as a judicial officer of
the Superior Court, has judicial responsibilities. The Clerk is judge of probate; that is, the
Clerk handles the probate of wills ( proceedings to determine if a paper writing is a valid will)
and the administration of estates of decedents, minors and incompetents. The Clerk also
hears a variety of special proceedings such as adoptions, incompetency determinations and
partitions of land and is empowered to issue arrest and search warrants and to exercise the
same powers as a magistrate with respect to taking pleas of guilty to minor littering, traffic,
wildlife, boating, marine fisheries, alcoholic beverage, State park recreation and worthless-check
offenses.
The Clerk is also responsible for all clerical and record- keeping functions of the Superior
Court and District Court. The Clerk operates a unified record- keeping system for all civil
actions, special proceedings, estates, criminal actions, juvenile actions, minutes of the court,
judgments, liens, lis pendens, and numerous other records required by law. The Clerk
maintains the judgment docket, is custodian of evidence in civil and criminal trials, and issues
civil summons and subpoenas. In addition, the Clerk invests money received and held by his
or her office in trust and receives and administers insurance or other money on behalf of
minors and incapacitated adults.
2
[ This Page Left Blank Intentionally ]
3
OBJECTIVES, SCOPE, METHODOLOGY, AND RESULTS
OBJECTIVES
As authorized by Article 5A of Chapter 147 of the North Carolina General Statutes and in
accordance with the standards contained in Government Auditing Standards issued by the
Comptroller General of the United States, we have conducted a fiscal control audit at
Catawba County Clerk of Superior Court.
The objective of a fiscal control audit is to gather and evaluate evidence about selected
internal control policies and procedures designed to ensure: ( 1) reliable financial accounting
and reporting and/ or ( 2) compliance with finance- related laws and regulations. Should any
information arise during the audit indicating that significant abuse may have occurred, the
audit objective may be extended to include internal control designed to prevent abuse and to
determine whether the abuse did in fact occur and its impact. Abuse involves behavior that is
deficient or improper when compared with behavior that a prudent person would consider
reasonable and necessary business practice.
Management is responsible for establishing and maintaining effective internal control.
Internal control is a process designed to provide reasonable assurance that relevant objectives
are achieved. Because of inherent limitations in internal control, errors or fraud may
nevertheless occur and not be detected. Also, projections of any evaluation of internal control
to future periods are subject to the risk that conditions may change or compliance with
policies and procedures may deteriorate.
SCOPE
Our audit scope covered the period August 1, 2003 through January 31, 2004 and included
selected internal controls in the following areas:
General
Control Environment - The control environment consists of the actions, policies, and
procedures that reflect the overall attitude of top management about control and its
importance to the entity. The control environment sets the tone of the organization,
influencing the control consciousness of its employees.
Information System Controls - Information system controls include activities that
relate to many computerized information system applications and support the effective
functioning of application controls. Information system controls include access and
end- user controls.
Financial Accounting and Reporting
Cash and Investment Cycle - The cash and investment cycle generally consists of the
activities associated with the custody of cash and investments. Financial statement
accounts typically impacted by the cycle include cash, certificates of deposit, and
other investments.
OBJECTIVES, SCOPE, METHODOLOGY, AND RESULTS ( CONTINUED)
4
Cash Receipts Cycle – The cash receipts cycle generally consists of the activities
associated with the receipt of cash. All financial statement accounts are impacted by
this cycle.
Cash Disbursements Cycle – The cash disbursements cycle generally consists of the
activities associated with disbursing cash for items other than operating and payroll
costs. All financial statement accounts are impacted by this cycle.
Finance- Related Compliance
Listed below are the compliance areas with one or more examples of the criteria for each.
Cash Management and Investments – Laws and regulations set limits on authorized
deposits and investments. Moneys are required to be deposited in approved
depositories and invested in specific investment types. Accounts must be protected
with adequate insurance and collateral. Also, disbursements that are unclaimed by
payees for a prescribed time period are often required to be remitted to the State
Treasurer in accordance with the State of North Carolina’s Escheats and Abandoned
Property Program.
Deposit of Receipts – Laws and regulations require deposit of moneys as soon as
possible in order to safeguard assets and to enhance the cash management and
investment program. Receipts over a specified amount are required to be deposited on
a daily basis.
Annual Financial Reporting – Laws and regulations require preparation of annual
financial report information in a prescribed format and within a prescribed timeframe.
Financial statement information is required to be filed with the Administrative Office
of the Courts timely after year- end.
Case Files – Laws and regulations set record maintenance and security requirements.
Records are required to be filed in a secure location using a uniform indexing system.
Costs and Fees – Laws and regulations set costs and fees to be charged. Uniform
costs and fees are required to be charged as established by State law.
Special Provisions – Laws and regulations impose specific requirements on particular
entities or activities. Partial payment collections are required to be distributed in the
order prescribed by State law. Other special provisions include the investment of
accounts greater than $ 2,000, record retention requirements, property held for
safekeeping procedures, and review procedures over monthly aging reports.
OBJECTIVES, SCOPE, METHODOLOGY, AND RESULTS ( CONCLUDED)
5
METHODOLOGY
To accomplish our audit objectives, we gained an understanding of internal control,
performed tests of control effectiveness, and performed corroborating direct tests of the
accounting records, reports, and/ or compliance as we considered necessary in the
circumstances. Specifically, we performed procedures such as interviewing personnel,
observing operations, reviewing policies, analyzing accounting records, and examining
documentation supporting recorded transactions and balances. Our procedures were more
limited than would be necessary to give an opinion on internal control, and accordingly, we
do not express such an opinion.
RESULTS
The results of our audit disclosed no internal control deficiencies or instances of
noncompliance or abuse that are considered reportable under Government Auditing
Standards.
6
[ This Page Left Blank Intentionally ]
7
DISTRIBUTION OF AUDIT REPORT
In accordance with General Statutes 147- 64.5 and 147- 64.6( c)( 14), copies of this report have
been distributed to the public officials listed below. Additional copies are provided to other
legislators, state officials, the press, and the general public upon request.
EXECUTIVE BRANCH
The Honorable Michael F. Easley
The Honorable Beverly M. Perdue
The Honorable Richard H. Moore
The Honorable Roy A. Cooper, III
Mr. David T. McCoy
Mr. Robert L. Powell
Governor of North Carolina
Lieutenant Governor of North Carolina
State Treasurer
Attorney General
State Budget Officer
State Controller
JUDICIAL BRANCH
The Honorable Al Jean M. Bogle
The Honorable John M. Kennedy
Mr. Steve Lusk
Catawba County Clerk of Superior Court
Director, Administrative Office of the Courts
Deputy Director for Administrative Services
Administrative Office of the Courts
LEGISLATIVE BRANCH
Appointees to the Joint Legislative Commission on Governmental Operations
President Pro Tempore
Senator Marc Basnight, Co- Chair
Senator Charles W. Albertson
Senator Patrick J. Ballantine
Senator Daniel G. Clodfelter
Senator Walter H. Dalton
Senator Charlie S. Dannelly
Senator James Forrester
Senator Linda Garrou
Senator Wilbur P. Gulley
Senator Fletcher L. Hartsell, Jr.
Senator David W. Hoyle
Senator Ellie Kinnaird
Senator Jeanne H. Lucas
Senator Stephen M. Metcalf
Senator Anthony E. Rand
Senator Eric M. Reeves
Senator Robert A. Rucho
Senator R. C. Soles, Jr.
Senator Scott Thomas
Speaker of the House
Representative James B. Black, Co- Chair
Representative Richard T. Morgan, Co- Chair
Representative Martha B. Alexander
Representative Rex L. Baker
Representative Bobby H. Barbee, Sr.
Representative Harold J. Brubaker
Representative Debbie A. Clary
Representative E. Nelson Cole
Representative James W. Crawford, Jr.
Representative William T. Culpepper, III
Representative W. Pete Cunningham
Representative W. Robert Grady
Representative Joe Hackney
Representative Julia C. Howard
Representative Joe L. Kiser
Representative Edd Nye
Representative William C. Owens, Jr.
Representative Wilma M. Sherrill
Representative Thomas E. Wright
Other Legislative Officials
Mr. James D. Johnson Director, Fiscal Research Division
May 17, 2004
ORDERING INFORMATION
Copies of this report may be obtained by contacting the:
Office of the State Auditor
State of North Carolina
2 South Salisbury Street
20601 Mail Service Center
Raleigh, North Carolina 27699- 0601
Internet: http:// www. ncauditor. net
Telephone: 919/ 807- 7500
Facsimile: 919/ 807- 7647